Ingredient Marketing...

When Intel launched the Intel Inside
campaign in the 1990s, many marketers thought
the chip giant was nuts. Who cared about the
microprocessor inside their PC? Turns out Intel
created a branding sensation and raised
awareness of the importance of ingredient
branding, says professor John Quelch. Today's
best example: The Boeing Dreamliner. Key
concepts include:
• The provider of a final product or service
will compromise its own brand-building to
add the ingredient brand on the package if 4
conditions are met.
• The Boeing "Dreamliner" ingredient brand
is sure it will appear as prominently on 787
fuselages as "Intel Inside" did on PCs.
Editor's Note: Harvard Business School
professor John Quelch writes a blog on
marketing issues, called Marketing Know:
How, for Harvard Business Online. It is
reprinted on HBS Working Knowledge.
Why do we pay more for an orange with a
Sunkist sticker? Because inspecting the outside
of the orange doesn't guarantee the quality of
what's inside. We need the assurance of the
Sunkist brand. A variant on this theme is
ingredient branding: putting the brand of an
ingredient on the outside of a product to
increase its appeal.
When is the provider of the final product or
service willing to compromise its own
brand-building to add the ingredient brand on
the package as well as in advertising? There are
4 conditions:
1. The ingredient is highly differentiated,
usually supported by patent protection, and so
adds an aura of quality to the overall product.
Think Gore-tex for water resistant rainwear.
2. The ingredient is central to the functional
performance of the final product. Think
Shimano gear systems on performance bicycles
or Monsanto's Nutrasweet, added to Equal
sweetener.
3. The final products are not well-branded
themselves, either because the category is
relatively new, because customers buy
infrequently or because there is low perceived
differentiation among the options. Think about
all of Dupont's ingredient brands for clothing,
from Rayon through Lycra.
4. The final products are complex,
assembled from components supplied by
multiple firms who may sell the "ingredients"
separately in an aftermarket. Think cars with
Michelin tires, Dolby stereo systems and
Champion spark plugs.
Today, the most impressive—and
unlikely—ingredient brand promises to be the
Boeing 787. On July 8, 2007, Boeing unveiled
the 787 to the public. Over 650 orders have
already been placed by more than 40 airlines
with the first test flight not even scheduled until
May 2008. In addition to being built from
composite materials rather than aluminum and,
therefore, more fuel efficient, the plane's design
includes many in-cabin innovations—including
superior humidity and climate control and lower
cabin pressure that will make air travel more
pleasurable.
For the first time, Boeing has branded a new
product, naming the 787 the Dreamliner. And
All Nippon Airways, the archrival of Japan
Airlines, which placed the first 50 orders is
already touting the plane as a differentiating
"ingredient" in its advertising. Boeing is betting
that passengers will seek out (and pay more for)
tickets on airlines that offer Dreamliner service,
especially when they are taking long-haul
flights where cabin comforts are especially
important. And you can bet that the
"Dreamliner" ingredient brand will appear as
prominently on 787 fuselages as "Intel
Inside"—perhaps the most famous of the
ingredient brand campaigns of the last
decade—appeared on PCs.